Inequality Makes Us Unhappy

Using General Social Survey data from 1972 to 2008, we found that Americans were on average happier in the years with less national income inequality than in the years with more national income inequality. We further demonstrated that this inverse relation between income inequality and happiness was explained by perceived fairness and general trust. That is, Americans trusted other people less and perceived other people to be less fair in the years with more national income inequality than in the years with less national income inequality. The negative association between income inequality and happiness held for lower-income respondents, but not for higher-income respondents. Most important, we found that the negative link between income inequality and the happiness of lower-income respondents was explained not by lower household income, but by perceived unfairness and lack of trust.

The paper is titled “Income Inequality and Hapiness“, and the authors are Shigehiro Oishi, Selin Kesebir, and Ed Diener.

One possible explanation for the inverse relationship between inequality and trust is that inequality primes the concept of competition. With spots on the earnings totem pole farther apart, the importance of leapfrogging your neighbor is greater.  With an increased awareness of “competitors”, there are fewer people you can trust, and the lack of trust leads to unhappiness.

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